Why Hewlett-Packard Company Shares Could Soar 30%

Before you go, we thought you'd like these...
Before you go close icon

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Hewlett-Packard  rallied 1% this morning after S&P Capital IQ upgraded the IT services giant from buy to strong buy.

So what: Along with the upgrade, analyst A. Zino boosted his price target to $44 (from $39), representing about 30% worth of upside to yesterday's close. So while contrarian traders might be turned off by HP's price strength over the past year, Zino's call could reflect a sense on Wall Street that its improvement prospects still aren't fully baked into the valuation.

Now what: S&P raised its 2014 EPS estimate for HP by $0.01 to $3.72 and its 2015 view by $0.04 to $3.92. "We have greater conviction about stabilization within HPQ's PC and printing markets, which should give it time to execute on new product initiatives in mobility, enterprise and software," said Zino. "We see a better IT spending outlook in calendar year '15 and positively view free cash flow/balance sheet improvement. We see earnings growth aided by cost cutting efforts." When you couple that upbeat outlook with HP's still-cheapish forward P/E of 9, it's tough to disagree with S&P's bullish conviction. 

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

The article Why Hewlett-Packard Company Shares Could Soar 30% originally appeared on Fool.com.

Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

People are Reading